Without Pfizer Deal, Allergan Looks Ahead: Could B+L be in its Sights?

Now that Pfizer and Allergan have mutually agreed to terminate their proposed merger, Allergan CEO Brent Saunders told analysts Wednesday morning that the company is moving ahead with new product development, but he would not rule out the possibility of Allergan making a play for his old employer, Bausch + Lomb.

The merger foundered when the US Treasury Department on Monday issued temporary and proposed regulations to make precisely the type of tax inversion Pfizer, based in New York, had hoped to consummate with Dublin-based Allergan. Within a day, the two companies had called off the merger.

But Saunders seemed undaunted in a conference call with analysts the day after the announcement, saying Allergan plans to stay on course with its strategy to remain a “growth pharmaceutical” company.

“While we were surprised that the Treasury issued the rules and proposed regulation on Monday, we were preparing for that contingency,” Saunders said. “Allergan and Pfizer both thought it was a remote possibility, but also fully were prepared and ready to spring into action on our independent strategies on a go-forward basis.”

That “go-forward basis” involves sticking to its plan to prime its pipeline of 70 mid- to late-stage programs with no less than 20 new global launches this year, he said, and to continue a growth strategy that includes strategic acquisitions and organic research and development.

Eye care plays a big role in those plans. Of the seven key therapeutic areas Allergan focuses on, eye care ranked fifth in terms of year-to-year growth, registering a healthy 13%. Among the 10 products Allergan is focusing on for development over the next five years, three are in eye care: abicipar for age-related macular degeneration (AMD), expected to launch in 2020; the Xen45 Gel Stent that Allergan obtained with its acquisition of AqueSys last year; and tavilermide for dry eye, projected to debut in 2019.

And three of Allergan’s top launches planned for the US this year and early next year are all in eye care, William Meury, executive VP for branded pharma, said in the conference call. Besides Xen45, they include Restasis MDPF for dry eye; and the OD-01 non-invasive nasal neurostimulator to increase tear flow in dry eye, which Allergan obtained last year with its acquisition of Oculeve.

In the conference call, the analysts followed up on comments Saunders made earlier in the day on CNBC about a possible acquisition of Bausch + Lomb, the company he headed as CEO until its sale to Valeant in 2013. Essentially, Saunders said Allergan might be interested in acquiring B+L if the price were right and it could fit in with Allergan’s overall strategy as a “growth pharma” company. Rumors have swirled about B+L being on the sale block as Valeant’s well-documented troubles have grown, but Valeant has not made it official that it’s trying to sell B+L.

“Obviously, I have a fondness for Bausch + Lomb that goes beyond my time at Allergan,” Saunders said. “And to be fair, Bausch + Lomb is a premier brand in eye care. It’s very different from Allergan in that most of its focus is in consumer eye care and then surgical.”

He acknowledged he knows many of the key people still at B+L. “They’re a great team, but that being said, first of all Bausch + Lomb is not for sale; and second, as I said on TV, Valeant may be for sale – or maybe it isn’t; I don’t know.”

Whether B+L is still worth the $8.7 billion Valeant paid for it in 2013 is another unknown. “We only buy growth assets,” Saunders said. “You’d have to understand the growth profile to see that it would even screen or be interesting to us.”

B+L would be “interesting” at the right price, he said, “given that we’re in eye care and it’s a complimentary business to us.” When Valeant acquired B+L, the company had a late-stage pipeline of “30 some programs,” Saunders said, and what he called “a strong organic growth profile.”

But Saunders added, “I can’t tell today that any of those things are still true. Based on public information it’s impossible to tell that it’s worth more than what it was sold for back three to four years ago.”

Now that the Pfizergan deal is off and rocky seas continue to roil Valeant’s ship, we may soon find out.